The Iraqi dinar is the official currency of Iraq. The nation stays largely isolated from global financial markets. The nation has no real sovereign credit, there is small need for its money which stays thinly traded. All Iraqi property, including its money are viewed as currently being a very great financial risk. The Iraqi dinar value, or the Iraqi dinar exchange rate, is effectively determined through the central bank through it's US currency auctions. The Iraq dinar was initially launched in 1932 when Iraq grew to become independent from British rule. The dinar changed the Indian rupee that had been launched by the British following winning control of Iraq from Turkey in WWI. The Iraqi dinar continues to be a managed or controlled currency throughout its existence.
Initially, when it was first placed into circulation, the Iraqi dinar was pegged towards the British pound. By 1959 Iraqi nationwide wealth had proved to be more and more coupled with oil. Oil was priced and traded globally in terms from the US currency, so the Iraqi currency peg was altered within the path of the US dollar and stays so today. After the initial US Gulf Struggle and the imposition of UN financial sanctions, financial conditions inside Iraq worsened sharply. By 1993, inflation had rocketed to an amazing yearly rate of more than 1000 percent, unemployment was at a massive fifty percent and also the Iraqi dinar exchange rate dropped considerably. Throughout 1994, it required about 2,500 dinars to buy one US dollar. To help the dinar, numerous measures had been launched in 1996 such as new regulations allowing Iraqi citizens to own overseas money financial institution accounts.
Following the 2nd Gulf War, new preparations had been created to take effect on 15 October 2003 to issue a new Iraqi dinar and to manage the Iraqi dinar exchange rate. Since those new arrangements have been launched, the Iraqi dinar value has steadily increased. The current exchange rate is 1,170 dinars for 1 US dollar. Figures published through the Central Intelligence Agency (CIA) in its World Fact Book display the number of Iraqi dinars needed to purchase 1 US dollar was at 1,475 dinars in 2005, 1,466 in 2006, 1,255 in 2007, 1,176 in 2008 and 1,170 in 2009. All indicators point to the presently prevailing exchange rate gradually increasing in the not too distant future.
Iraq just lately quantified its confirmed raw oil reserves at 143 billion barrels, in comparison with Saudi Arabia with 265 billion barrels of confirmed reserves. The nice part about these reserves are that they are effortlessly accessible and as a result the oil is cheap to produce. Roughly 95% of all Iraqi export value is derived from crude oil.
In the long run, as political balance returns to Iraq, its financial programs gains efficiencies and its citizens capture the full value of the national crude oil wealth, the Iraqi dinar value might be anticipated to strengthen considerably over its current trading valuations.
There are other sources and articles on the subject of Iraqi dinar value listed below.
Showing posts with label iraqi dinar value. Show all posts
Showing posts with label iraqi dinar value. Show all posts
Sunday, December 26, 2010
Sunday, November 22, 2009
Iraqi Dinar Value - The Dollar While Weak Is Still King, Even In Iraq
Interesting article on the supposed fall of the dollar and the possible replacement by other currencies as the world currency of choice. The Iraqi Dinar could be worth even more than expected.
Globally, the Greenback Remains King
The Wall Street Journal
October 29, 2009
The U.S. dollar, once universally accepted as the world's strongest currency, has been trounced in recent months by everything from the euro to the Brazilian real to the South Korean won. But in the back-alley markets where business is done in many of the world's developing economies, the dollar still reigns.
In jewelry stores in Vietnam, taxicabs in Venezuela and outdoor markets in Nigeria, black-market money-changers say the dollar is still the currency of choice, even though its value has fallen in some cases.
"The U.S. dollar is losing value, but not here in Vietnam," said Vu Manh Quynh, an auto trader who regularly exchanges dong for dollars in the winding streets of Hanoi's Old Quarter. "Vietnamese people still keep U.S. dollars and gold." While the U.S. dollar fetches 17,858 dong on the official rates, the black market rate is closer to 18,600. Hai Duong, a currency trader, said he had 20 or more customers buying U.S. dollars on a recent Wednesday, compared with two customers buying euros.
While their true size is unknown, black markets in currencies are key to greasing the wheels of commerce in countries that have tight currency controls. They provide residents and companies with protection against inflation or a possible devaluation of the local currency, and give companies a source of dollars with which to buy and sell goods abroad. In most countries, the markets are illegal, while in others they are tacitly condoned.
"Typically, dollars are king in the black markets of the world," says Kenneth Rogoff, professor of economics at Harvard University and former chief economist at the International Monetary Fund.
Prof. Rogoff estimates that as much as 75% of U.S. notes in circulation, or more than $600 billion, are held outside the U.S. Most of that is likely in what he calls the underground economy, where transactions are made beyond the oversight of government -- much of which is juiced by the black market.
"This money is not in cash registers, it's not in bank vaults," Prof. Rogoff says.
In the world's official foreign-exchange markets, where turnover totals about $3 trillion each day, according to the Bank for International Settlements, the dollar's luster has diminished. The dollar, for example, has fallen about 6% against the euro this year. The dollar has dropped about 15% against a basket of currencies since early March.
The ballooning U.S. deficit and a move by investors away from the haven of the dollar as world economies recover have sparked worries that the currency may be headed for a years-long swoon. It also has opened the door for renewed questioning of the dollar's future as the world's reserve currency.
For Venezuelans, where the black market plays a crucial role in the financial system, the dollar has retained its status. Residents seeking protection against inflation or a devaluation of the bolivar turn to currency traders. Large companies that need dollars for operations abroad also visit the unregulated market.
View Full Image
Justin Mott for The Wall Street Journal
."Having dollars is like a barricade," says Arnaldo Morales, a cabby who moonlights as a currency trader, buying dollars from travelers as they enter the country, then selling them to Venezuelans.
Mr. Morales says he has been trading dollars since 2003, when President Hugo Chávez imposed a currency peg. Residents can purchase only $2,500 for travel abroad each year at the official rate of 2.15 bolivars.
The economy has become so heavily dependent on the so-called parallel exchange rate for greenbacks that the government was recently forced to intervene after the dollar traded as high as seven bolivars in August. The government is flooding the domestic market with dollars by selling bonds to locals who then trade them abroad for U.S. currency.
"The dollar will always be strong," says Andrea Martinez, a trader who dismissed as temporary the recent decline in the black-market rate. Ms. Martinez operates inside a tiny, nondescript mall where shotgun-carrying private-security guards wearing bulletproof vests watch over rows of pawn shops that serve as a front for dollar traders. On a good day, she says, she still sells as much as $5,000.
In Nigeria, sub-Sahara Africa's second-largest economy, currency traders still deal predominantly in American currency. The black-market traders even have their own trade group, the Association of Bureaux de Change Operators of Nigeria.
"The dollar still has dominance in Nigeria," said Alhaji Farouk Suleman, the president of the group. "The exchange rate might not be good, but you know what you're dealing with and that you can use the dollar anywhere you go. I don't see any real shift towards the pound or euro."
The Nigerian naira, after plummeting late last year and earlier this year, has stabilized against the dollar, thanks to renewed confidence after harsh banking reforms undertaken by a new central bank governor. The dollar was fetching 183 naira in the spring, but now buys about 153 naira.
But the dollar's descent against the world's biggest currencies hasn't gone unnoticed.
On the streets of Mumbai, illegal currency traders that swap wads of cash from bags behind their shops in the bustling back alleys of Colaba, a neighborhood popular with tourists, say business has been slow recently. The dollar's decline has sellers waiting for a rebound and buyers waiting for a better deal.
"Business is way down," says one trader, spitting a stream of red betel-nut juice in the alley behind his shop and wiping his moustache. "People still want to wait." The dollar buys 47 rupees at licensed currency-trading companies and 46.70 rupees on the black market.
And at the Super Rich currency exchange near one of Bangkok's busiest downtown thoroughfares, Thaweesak Kanchanakorn says he and his girlfriend are planning to vacation in the U.S., and that he thought it might be a good idea to invest in dollars now, because they're "cheap." In the long run, "I don't think the U.S. dollar will still be a major currency for reserves anymore," he said. China's yuan "will take its place."
For now, those seeking to exchange bolivars or dong are choosing the U.S. dollar, if only because it remains the most recognizable of the world's currencies.
In Iraq, where legal currency exchanges have become common, the U.S. presence since 2003 has kept up demand for the dollar at the expense of the euro.
Ali Mohammed of the Al Nasir currency-exchange company said that although the world market value of the euro has risen, it is difficult to exchange in Baghdad. And the dollar likely will be Iraq's unofficial second currency for some time to come. The dollar fetched about 1,190 dinars in September, according to central bank figures, little changed from 1,220 dinars at the beginning of 2008.
"It's the only thing used, besides the Iraqi dinar, for commercial business and trade," he said. "As long as it stays pretty stable, we don't mind this."
Carlos Denis, who trades in the Venezuelan mall alongside Ms. Martinez, insists that the dollar is still the only currency that matters. "Take out a dollar bill in the remotest place in world and people will recognize it," he said.
-- Eric Bellman in India, Gina Chon in Iraq and Wilawan Watcharasakwet
in Thailand contributed
to this article.
Globally, the Greenback Remains King
The Wall Street Journal
October 29, 2009
The U.S. dollar, once universally accepted as the world's strongest currency, has been trounced in recent months by everything from the euro to the Brazilian real to the South Korean won. But in the back-alley markets where business is done in many of the world's developing economies, the dollar still reigns.
In jewelry stores in Vietnam, taxicabs in Venezuela and outdoor markets in Nigeria, black-market money-changers say the dollar is still the currency of choice, even though its value has fallen in some cases.
"The U.S. dollar is losing value, but not here in Vietnam," said Vu Manh Quynh, an auto trader who regularly exchanges dong for dollars in the winding streets of Hanoi's Old Quarter. "Vietnamese people still keep U.S. dollars and gold." While the U.S. dollar fetches 17,858 dong on the official rates, the black market rate is closer to 18,600. Hai Duong, a currency trader, said he had 20 or more customers buying U.S. dollars on a recent Wednesday, compared with two customers buying euros.
While their true size is unknown, black markets in currencies are key to greasing the wheels of commerce in countries that have tight currency controls. They provide residents and companies with protection against inflation or a possible devaluation of the local currency, and give companies a source of dollars with which to buy and sell goods abroad. In most countries, the markets are illegal, while in others they are tacitly condoned.
"Typically, dollars are king in the black markets of the world," says Kenneth Rogoff, professor of economics at Harvard University and former chief economist at the International Monetary Fund.
Prof. Rogoff estimates that as much as 75% of U.S. notes in circulation, or more than $600 billion, are held outside the U.S. Most of that is likely in what he calls the underground economy, where transactions are made beyond the oversight of government -- much of which is juiced by the black market.
"This money is not in cash registers, it's not in bank vaults," Prof. Rogoff says.
In the world's official foreign-exchange markets, where turnover totals about $3 trillion each day, according to the Bank for International Settlements, the dollar's luster has diminished. The dollar, for example, has fallen about 6% against the euro this year. The dollar has dropped about 15% against a basket of currencies since early March.
The ballooning U.S. deficit and a move by investors away from the haven of the dollar as world economies recover have sparked worries that the currency may be headed for a years-long swoon. It also has opened the door for renewed questioning of the dollar's future as the world's reserve currency.
For Venezuelans, where the black market plays a crucial role in the financial system, the dollar has retained its status. Residents seeking protection against inflation or a devaluation of the bolivar turn to currency traders. Large companies that need dollars for operations abroad also visit the unregulated market.
View Full Image
Justin Mott for The Wall Street Journal
."Having dollars is like a barricade," says Arnaldo Morales, a cabby who moonlights as a currency trader, buying dollars from travelers as they enter the country, then selling them to Venezuelans.
Mr. Morales says he has been trading dollars since 2003, when President Hugo Chávez imposed a currency peg. Residents can purchase only $2,500 for travel abroad each year at the official rate of 2.15 bolivars.
The economy has become so heavily dependent on the so-called parallel exchange rate for greenbacks that the government was recently forced to intervene after the dollar traded as high as seven bolivars in August. The government is flooding the domestic market with dollars by selling bonds to locals who then trade them abroad for U.S. currency.
"The dollar will always be strong," says Andrea Martinez, a trader who dismissed as temporary the recent decline in the black-market rate. Ms. Martinez operates inside a tiny, nondescript mall where shotgun-carrying private-security guards wearing bulletproof vests watch over rows of pawn shops that serve as a front for dollar traders. On a good day, she says, she still sells as much as $5,000.
In Nigeria, sub-Sahara Africa's second-largest economy, currency traders still deal predominantly in American currency. The black-market traders even have their own trade group, the Association of Bureaux de Change Operators of Nigeria.
"The dollar still has dominance in Nigeria," said Alhaji Farouk Suleman, the president of the group. "The exchange rate might not be good, but you know what you're dealing with and that you can use the dollar anywhere you go. I don't see any real shift towards the pound or euro."
The Nigerian naira, after plummeting late last year and earlier this year, has stabilized against the dollar, thanks to renewed confidence after harsh banking reforms undertaken by a new central bank governor. The dollar was fetching 183 naira in the spring, but now buys about 153 naira.
But the dollar's descent against the world's biggest currencies hasn't gone unnoticed.
On the streets of Mumbai, illegal currency traders that swap wads of cash from bags behind their shops in the bustling back alleys of Colaba, a neighborhood popular with tourists, say business has been slow recently. The dollar's decline has sellers waiting for a rebound and buyers waiting for a better deal.
"Business is way down," says one trader, spitting a stream of red betel-nut juice in the alley behind his shop and wiping his moustache. "People still want to wait." The dollar buys 47 rupees at licensed currency-trading companies and 46.70 rupees on the black market.
And at the Super Rich currency exchange near one of Bangkok's busiest downtown thoroughfares, Thaweesak Kanchanakorn says he and his girlfriend are planning to vacation in the U.S., and that he thought it might be a good idea to invest in dollars now, because they're "cheap." In the long run, "I don't think the U.S. dollar will still be a major currency for reserves anymore," he said. China's yuan "will take its place."
For now, those seeking to exchange bolivars or dong are choosing the U.S. dollar, if only because it remains the most recognizable of the world's currencies.
In Iraq, where legal currency exchanges have become common, the U.S. presence since 2003 has kept up demand for the dollar at the expense of the euro.
Ali Mohammed of the Al Nasir currency-exchange company said that although the world market value of the euro has risen, it is difficult to exchange in Baghdad. And the dollar likely will be Iraq's unofficial second currency for some time to come. The dollar fetched about 1,190 dinars in September, according to central bank figures, little changed from 1,220 dinars at the beginning of 2008.
"It's the only thing used, besides the Iraqi dinar, for commercial business and trade," he said. "As long as it stays pretty stable, we don't mind this."
Carlos Denis, who trades in the Venezuelan mall alongside Ms. Martinez, insists that the dollar is still the only currency that matters. "Take out a dollar bill in the remotest place in world and people will recognize it," he said.
-- Eric Bellman in India, Gina Chon in Iraq and Wilawan Watcharasakwet
in Thailand contributed
to this article.
Monday, September 21, 2009
Iraqi Dinar Value - Biden Pushes Iraqi Leaders On Vote Law, Oil-Bid Perks
Biden Pushes Iraqi Leaders On Vote Law, Oil-Bid Perks
By Scott Wilson
Washington Post Staff Writer
Thursday, September 17, 2009
BAGHDAD, Sept. 16 -- Vice President Biden pressed Iraqi leaders Wednesday to approve as quickly as possible legislation that establishes rules for the planned January general election and to make the next round of bids to develop Iraqi oil concessions more attractive to foreign investors.
In a series of meetings in the Green Zone, Biden listened to the concerns of Iraqi leaders, now in the heat of an election season that Obama administration officials acknowledge will delay until after the vote any progress on such pressing issues as passing a law on the equitable distribution of national oil revenue among Shiites, Sunnis and Kurds.
A senior administration official said Biden also made his interests known on a variety of issues, such as the need for the Iraqi parliament to adopt laws to better protect foreign investment and leaving unchanged the terms of the timetable for the withdrawal of the 130,000 U.S. troops now in the country.
This is Biden's second visit to Iraq in two months, and it comes as the Obama administration is trying to manage a growing Iraqi impatience with the U.S. military presence here. Prime Minister Nouri al-Maliki, whom Biden met with Wednesday evening, has expressed support for a proposed referendum that would hasten by a year the 2011 withdrawal deadline for all U.S. forces in Iraq.
U.S. military and diplomatic officials fear that a rapid departure could undermine the security gains realized over the past year, and in his meetings Biden asked Iraqi officials whether they thought the referendum would proceed. But Biden is reluctant to be seen as meddling in a domestic Iraqi issue, and a senior administration official said the vice president operated largely in "listening mode."
Speaking next to Biden at his official residence, Maliki said U.S. forces had complied with the terms of the agreement outlining the schedule for the troop withdrawal and the training of Iraqi forces with "high credibility."
Biden reiterated the terms of the withdrawal timeline. The senior administration official said the two men's statements mean "that we have a mutual interest in moving forward" under the conditions set out in the agreement.
Biden also appealed to Iraqi leaders to offer more financial incentives for foreign investors to bid on Iraqi oil concessions; only one bid of the eight put out this year was accepted. The administration official estimated that one additional deal would translate into $50 billion to $60 billion in foreign investment in Iraq, generate $600 million in annual revenue and create tens of thousands of jobs in the country.
The official said Biden would deliver the same message to Kurdish leaders in meetings scheduled for Thursday. Kurds' interest in ensuring what they see as a fair share of proceeds from the rich oil fields of Iraq's north has presented an obstacle to a revenue-sharing agreement. Reaching a deal is crucial to Iraq's oil-dependent economy, but the goal has been politically elusive for years.
"In an election season in any country, it's difficult to make definitive progress on any issue, and these are difficult issues," the official said, adding that Biden's hope is for the next Iraqi government to be "in good position" to move on the oil legislation and other matters soon after the election.
In all his meetings, Biden asked Iraqi officials to assess their progress on an election law, concerned that without one in place soon the January vote will not be able to proceed. The official said he particularly pressed Ayad al-Samarraie, speaker of the Iraqi parliament, because the law is a legislative matter.
Biden and Maliki expressed hope that the Iraq Business and Investment Conference scheduled to be held in Washington next month would encourage private U.S. investment in Iraq. But the administration source said Biden told Iraqi leaders that regulatory and other financial protections need to be enacted to make foreign investors more comfortable doing business here.
Some of the proposed protections are before parliament, the official said, and their passage would allow, among other things, for the Overseas Private Investment Corp. to extend loan guarantees to companies wishing to do business in Iraq.
By Scott Wilson
Washington Post Staff Writer
Thursday, September 17, 2009
BAGHDAD, Sept. 16 -- Vice President Biden pressed Iraqi leaders Wednesday to approve as quickly as possible legislation that establishes rules for the planned January general election and to make the next round of bids to develop Iraqi oil concessions more attractive to foreign investors.
In a series of meetings in the Green Zone, Biden listened to the concerns of Iraqi leaders, now in the heat of an election season that Obama administration officials acknowledge will delay until after the vote any progress on such pressing issues as passing a law on the equitable distribution of national oil revenue among Shiites, Sunnis and Kurds.
A senior administration official said Biden also made his interests known on a variety of issues, such as the need for the Iraqi parliament to adopt laws to better protect foreign investment and leaving unchanged the terms of the timetable for the withdrawal of the 130,000 U.S. troops now in the country.
This is Biden's second visit to Iraq in two months, and it comes as the Obama administration is trying to manage a growing Iraqi impatience with the U.S. military presence here. Prime Minister Nouri al-Maliki, whom Biden met with Wednesday evening, has expressed support for a proposed referendum that would hasten by a year the 2011 withdrawal deadline for all U.S. forces in Iraq.
U.S. military and diplomatic officials fear that a rapid departure could undermine the security gains realized over the past year, and in his meetings Biden asked Iraqi officials whether they thought the referendum would proceed. But Biden is reluctant to be seen as meddling in a domestic Iraqi issue, and a senior administration official said the vice president operated largely in "listening mode."
Speaking next to Biden at his official residence, Maliki said U.S. forces had complied with the terms of the agreement outlining the schedule for the troop withdrawal and the training of Iraqi forces with "high credibility."
Biden reiterated the terms of the withdrawal timeline. The senior administration official said the two men's statements mean "that we have a mutual interest in moving forward" under the conditions set out in the agreement.
Biden also appealed to Iraqi leaders to offer more financial incentives for foreign investors to bid on Iraqi oil concessions; only one bid of the eight put out this year was accepted. The administration official estimated that one additional deal would translate into $50 billion to $60 billion in foreign investment in Iraq, generate $600 million in annual revenue and create tens of thousands of jobs in the country.
The official said Biden would deliver the same message to Kurdish leaders in meetings scheduled for Thursday. Kurds' interest in ensuring what they see as a fair share of proceeds from the rich oil fields of Iraq's north has presented an obstacle to a revenue-sharing agreement. Reaching a deal is crucial to Iraq's oil-dependent economy, but the goal has been politically elusive for years.
"In an election season in any country, it's difficult to make definitive progress on any issue, and these are difficult issues," the official said, adding that Biden's hope is for the next Iraqi government to be "in good position" to move on the oil legislation and other matters soon after the election.
In all his meetings, Biden asked Iraqi officials to assess their progress on an election law, concerned that without one in place soon the January vote will not be able to proceed. The official said he particularly pressed Ayad al-Samarraie, speaker of the Iraqi parliament, because the law is a legislative matter.
Biden and Maliki expressed hope that the Iraq Business and Investment Conference scheduled to be held in Washington next month would encourage private U.S. investment in Iraq. But the administration source said Biden told Iraqi leaders that regulatory and other financial protections need to be enacted to make foreign investors more comfortable doing business here.
Some of the proposed protections are before parliament, the official said, and their passage would allow, among other things, for the Overseas Private Investment Corp. to extend loan guarantees to companies wishing to do business in Iraq.
Monday, September 14, 2009
iraqi dinar value - Iraq Oil “Drill Baby Drill” part 2
Iraq Oil “Drill Baby Drill” part 2
This last February 2009 Iraq Drilling Co. signed and completed the creation of joint venture with the British Mesopotamia Petroleum called Iraq Oil Service Co. (IOSCO).
This new company will purchase twelve drilling rigs as well as secure drilling contracts in the fields controlled by South Oil Company (SOC), Oil Exploration Company (OEC), Missan Oil Company (MOC) and Northern Oil Company (NOC), all state owned organizations in Iraq.
IOSCO will be drilling at least 60 drills per year. These activities should bring a 120,000 barrels increase in the country’s daily oil production during the first year. The first fields where there will be new drills are Fakka, Bazargan and Halfaya.
Iraq Drilling Co. and Mesopotamia Petroleum, which hold 51 percent and 49 percent of the joint venture respectively, decided to invest $400 million in the new company. As part of this investment, Mesopotamia Petroleum will supply the joint venture with integrated methods and technologies aimed at boosting production.
An oil drilling tender was held on December 31, 2008, where 35 international firms joined. In April 2009, the Ministry of Oil announced a list of nine investors selected to participate in the negotiations for drilling contracts, including KazMunaiGaz (Kazakhstan), Rosneft and Tatneft (Russia), PetroVietnam, Pakistan Petroleum, Sonangol (Angola), Jogmec (Japan), Cairn Energy Plc (UK) and Oil India.
The winning bids were announced at the end of June 2009. Winning bidders will be awarded service contracts under which Baghdad will pay them a certain fee, and offer production sharing contracts which would involve the sharing of profits.
Despite the Ministry of Oil’s efforts to bring international investments to Iraq, contractors remain sceptical on the country’s ability to complete the implementation of these projects. The problems lay not in money or security issues, but the process of decision making, as Iraq’s government is still not stable and solid.
The country’s inability to complete the implementation of contract procedures has been a long-term saga putting obstacles in the rehabilitation of the oil industry. Back in 2004, Weatherford, a US company, had won a contract for 60 wells which was never completed. Yes, that was 5 years ago, we will see if the massive amount of new contract agreeements get drilled out.
**************************************
Article may be reprinted online and offline as long
as this box remains and hyperlinked online. Written
by Darren Chabluk for http://DrDinar.com/blog
**************************************
This last February 2009 Iraq Drilling Co. signed and completed the creation of joint venture with the British Mesopotamia Petroleum called Iraq Oil Service Co. (IOSCO).
This new company will purchase twelve drilling rigs as well as secure drilling contracts in the fields controlled by South Oil Company (SOC), Oil Exploration Company (OEC), Missan Oil Company (MOC) and Northern Oil Company (NOC), all state owned organizations in Iraq.
IOSCO will be drilling at least 60 drills per year. These activities should bring a 120,000 barrels increase in the country’s daily oil production during the first year. The first fields where there will be new drills are Fakka, Bazargan and Halfaya.
Iraq Drilling Co. and Mesopotamia Petroleum, which hold 51 percent and 49 percent of the joint venture respectively, decided to invest $400 million in the new company. As part of this investment, Mesopotamia Petroleum will supply the joint venture with integrated methods and technologies aimed at boosting production.
An oil drilling tender was held on December 31, 2008, where 35 international firms joined. In April 2009, the Ministry of Oil announced a list of nine investors selected to participate in the negotiations for drilling contracts, including KazMunaiGaz (Kazakhstan), Rosneft and Tatneft (Russia), PetroVietnam, Pakistan Petroleum, Sonangol (Angola), Jogmec (Japan), Cairn Energy Plc (UK) and Oil India.
The winning bids were announced at the end of June 2009. Winning bidders will be awarded service contracts under which Baghdad will pay them a certain fee, and offer production sharing contracts which would involve the sharing of profits.
Despite the Ministry of Oil’s efforts to bring international investments to Iraq, contractors remain sceptical on the country’s ability to complete the implementation of these projects. The problems lay not in money or security issues, but the process of decision making, as Iraq’s government is still not stable and solid.
The country’s inability to complete the implementation of contract procedures has been a long-term saga putting obstacles in the rehabilitation of the oil industry. Back in 2004, Weatherford, a US company, had won a contract for 60 wells which was never completed. Yes, that was 5 years ago, we will see if the massive amount of new contract agreeements get drilled out.
**************************************
Article may be reprinted online and offline as long
as this box remains and hyperlinked online. Written
by Darren Chabluk for http://DrDinar.com/blog
**************************************
Saturday, August 22, 2009
Iraqi Dinar Value - Civil war in Iraq is still a real possibility
Civil war in Iraq is still a real possibility
REALPOLITIK: David Pratt
ISN'T IT strange the way we seem to have taken our eye off the ball when it comes to events in Iraq? Preoccupied with the growing violence and rising British casualty rate in Afghanistan, suddenly it seems we have no appetite for news coming out of places like Baghdad, Basra, Kirkuk and Mosul. It was not always like this, of course. Barely a few years ago Afghanistan was dubbed the "forgotten war" as world attention focused on defeating the insurgency in Iraq.
Today it is a different story, with our coverage only picking up when the death toll cannot be ignored. This was graphically illustrated last week when TV pictures showed the effects of bomb and mortar attacks that killed 95 people and wounded more than 500 in Baghdad.
Beyond these images of carnage, however, there is a distinct lack of incisive behind-the-headlines coverage precisely at the moment when Iraq's ethnic and religious faultlines once again appear to be cracking.
The implications of this fracturing could be profound not only for Iraq and its people but for the ongoing war against the Taliban in Afghanistan, recently bolstered by US and British troops redeployed there after the draw-down in Iraq.
As any intelligence analyst will confirm, it is often the accumulation of small details from comparatively insignificant individual events that point to the bigger long-term picture.
For example, take the seemingly run-of-the-mill report from Iraq last Friday about the discovery of a member of the Kurdish Peshmerga security forces found riddled with bullets in west Mosul. By Iraq's standards, nothing particularly unusual there, you might say. But this latest fatality is one of more than 100 deaths in mixed Arab-Kurdish areas over the past month.
While last week's explosion of violence in Baghdad appeared to be motivated by the now familiar - albeit still worrying - sectarian conflict between Shia and Sunni insurgents, there are now other potentially more dangerous battle lines being drawn across the country. Most notably, that between Baghdad and the Iraqi Kurdish government based in the northern city of Erbil. At the core of this stand-off lie the Kurdish government's plans to expand the land under its control and the oil reserves it contains. Baghdad is unlikely to stand idly by and let this happen.
Last month, it was hoped that Iraqi Kurdistan's landmark election might ease the tension in this dispute over resources and territory, but the death toll on the ground suggests otherwise. Observers now consistently refer to the Arab-Kurdish "trigger-line", while US defence secretary Robert Gates recently identified the dispute between Baghdad and the Kurds as the single biggest threat to the country's stability.
Any confrontation with Baghdad arouses intense passions among Kurds who still remember Saddam Hussein's genocidal assaults such as Operation Anfal, which resulted in the deaths of tens of thousands of innocent civilians in the 1980s. While three years ago it was the Sunni-Shia divide that threatened to plunge Iraq into civil war, today it is this old antagonism between Arab and Kurd that could tip the country over the edge.
Not surprisingly, in an effort to defuse this mounting tension, the US military is proposing to deploy troops for the first time in a strip of disputed territory in northern Iraq. Last Monday, the top American general in Iraq, Ray Odierno, said US troops would be stationed alongside Iraqi security forces and Kurdish Peshmerga militiamen in the province of Nineveh, near oil-rich Kirkuk, the scene of several recent high-profile bombings and shootings like that of the Kurdish Peshmerga soldier on Friday.
While Odierno insists the US involvement will not be "full-on", it must be the last thing Washington needs as it struggles to keep tabs on the situation in Baghdad and commit to containing the Taliban threat in Afghanistan in the wake of controversial elections there. So much for President Barack Obama's hopes of having all US combat troops out of Iraq within 12 months.
For the moment, any proper lasting peace remains a pipe dream for many ordinary Iraqis and it will stay that way if the security situation is once again allowed to unravel. These days, from Mosul to Baghdad, the countless individual killings of Kurd and Arab, Sunni and Shia often fail to make the headlines. But be under no illusions, their cumulative impact could yet drag Iraq into the abyss.
REALPOLITIK: David Pratt
ISN'T IT strange the way we seem to have taken our eye off the ball when it comes to events in Iraq? Preoccupied with the growing violence and rising British casualty rate in Afghanistan, suddenly it seems we have no appetite for news coming out of places like Baghdad, Basra, Kirkuk and Mosul. It was not always like this, of course. Barely a few years ago Afghanistan was dubbed the "forgotten war" as world attention focused on defeating the insurgency in Iraq.
Today it is a different story, with our coverage only picking up when the death toll cannot be ignored. This was graphically illustrated last week when TV pictures showed the effects of bomb and mortar attacks that killed 95 people and wounded more than 500 in Baghdad.
Beyond these images of carnage, however, there is a distinct lack of incisive behind-the-headlines coverage precisely at the moment when Iraq's ethnic and religious faultlines once again appear to be cracking.
The implications of this fracturing could be profound not only for Iraq and its people but for the ongoing war against the Taliban in Afghanistan, recently bolstered by US and British troops redeployed there after the draw-down in Iraq.
As any intelligence analyst will confirm, it is often the accumulation of small details from comparatively insignificant individual events that point to the bigger long-term picture.
For example, take the seemingly run-of-the-mill report from Iraq last Friday about the discovery of a member of the Kurdish Peshmerga security forces found riddled with bullets in west Mosul. By Iraq's standards, nothing particularly unusual there, you might say. But this latest fatality is one of more than 100 deaths in mixed Arab-Kurdish areas over the past month.
While last week's explosion of violence in Baghdad appeared to be motivated by the now familiar - albeit still worrying - sectarian conflict between Shia and Sunni insurgents, there are now other potentially more dangerous battle lines being drawn across the country. Most notably, that between Baghdad and the Iraqi Kurdish government based in the northern city of Erbil. At the core of this stand-off lie the Kurdish government's plans to expand the land under its control and the oil reserves it contains. Baghdad is unlikely to stand idly by and let this happen.
Last month, it was hoped that Iraqi Kurdistan's landmark election might ease the tension in this dispute over resources and territory, but the death toll on the ground suggests otherwise. Observers now consistently refer to the Arab-Kurdish "trigger-line", while US defence secretary Robert Gates recently identified the dispute between Baghdad and the Kurds as the single biggest threat to the country's stability.
Any confrontation with Baghdad arouses intense passions among Kurds who still remember Saddam Hussein's genocidal assaults such as Operation Anfal, which resulted in the deaths of tens of thousands of innocent civilians in the 1980s. While three years ago it was the Sunni-Shia divide that threatened to plunge Iraq into civil war, today it is this old antagonism between Arab and Kurd that could tip the country over the edge.
Not surprisingly, in an effort to defuse this mounting tension, the US military is proposing to deploy troops for the first time in a strip of disputed territory in northern Iraq. Last Monday, the top American general in Iraq, Ray Odierno, said US troops would be stationed alongside Iraqi security forces and Kurdish Peshmerga militiamen in the province of Nineveh, near oil-rich Kirkuk, the scene of several recent high-profile bombings and shootings like that of the Kurdish Peshmerga soldier on Friday.
While Odierno insists the US involvement will not be "full-on", it must be the last thing Washington needs as it struggles to keep tabs on the situation in Baghdad and commit to containing the Taliban threat in Afghanistan in the wake of controversial elections there. So much for President Barack Obama's hopes of having all US combat troops out of Iraq within 12 months.
For the moment, any proper lasting peace remains a pipe dream for many ordinary Iraqis and it will stay that way if the security situation is once again allowed to unravel. These days, from Mosul to Baghdad, the countless individual killings of Kurd and Arab, Sunni and Shia often fail to make the headlines. But be under no illusions, their cumulative impact could yet drag Iraq into the abyss.
Thursday, August 20, 2009
iraqi dinar value - Iraq attacks threaten stability claims
Iraq attacks threaten stability claims
By Magdi Abdelhadi BBC Arab affairs analyst
There is clearly a sense that violence in Iraq has been on the way up since the American troops pulled out of urban centres at the end of June.
But it is still not as high as it used to be three years ago, when the country appeared to be on the brink of an all-out sectarian war between the majority Shia and Sunni insurgents.
However, the frequency of the recent attacks - and the fact that the latest blasts hit the heart of government in central Baghdad, will raise questions about the competence of the Iraqi security services as well as about the motives.
Whether it is primarily sectarian or not, the apparent aim of the violence has almost always been to destabilise Iraq and show the government losing control.
This view appears to be even more plausible now as Iraqi politicians have begun preparing for forthcoming parliamentary elections due early next year.
Should continued violence force a change to those plans, this would be a serious blow to President Obama, who has made orderly military disengagement from Iraq one of his top foreign policy priorities.
Increased violence could in theory make it difficult for parties in the current governing coalition to claim that they have made Iraq safe again.
This has led some analysts to conclude that those behind the recent attacks are not only the usual suspects - al-Qaeda or former Baathists - but also political players who want scupper Prime Minister Nuri Maliki's hopes for another electoral victory.
If the current level of violence persists or, worse still, escalates, and American troops are called upon to intervene, this could seriously undermine claims that Iraq was on the right track to genuine independence.
Aside from the human cost of the violence, the main losers would be Mr Maliki and his coalition partners from the Shia majority, who have been the main beneficiaries of the new political order in Iraq.
Continued or increased violence could also easily increase the risk of wider regional troubles, with Iraq's neighbours backing one group against its rivals to ensure an outcome favourable to their national interests.
Iraq and Washington had agreed that all American troops will have withdrawn by the end of 2011.
Should continued violence force a change to those plans, this would be a serious blow to US President Barack Obama, who has made orderly military disengagement from Iraq one of his top foreign policy priorities.
By Magdi Abdelhadi BBC Arab affairs analyst
There is clearly a sense that violence in Iraq has been on the way up since the American troops pulled out of urban centres at the end of June.
But it is still not as high as it used to be three years ago, when the country appeared to be on the brink of an all-out sectarian war between the majority Shia and Sunni insurgents.
However, the frequency of the recent attacks - and the fact that the latest blasts hit the heart of government in central Baghdad, will raise questions about the competence of the Iraqi security services as well as about the motives.
Whether it is primarily sectarian or not, the apparent aim of the violence has almost always been to destabilise Iraq and show the government losing control.
This view appears to be even more plausible now as Iraqi politicians have begun preparing for forthcoming parliamentary elections due early next year.
Should continued violence force a change to those plans, this would be a serious blow to President Obama, who has made orderly military disengagement from Iraq one of his top foreign policy priorities.
Increased violence could in theory make it difficult for parties in the current governing coalition to claim that they have made Iraq safe again.
This has led some analysts to conclude that those behind the recent attacks are not only the usual suspects - al-Qaeda or former Baathists - but also political players who want scupper Prime Minister Nuri Maliki's hopes for another electoral victory.
If the current level of violence persists or, worse still, escalates, and American troops are called upon to intervene, this could seriously undermine claims that Iraq was on the right track to genuine independence.
Aside from the human cost of the violence, the main losers would be Mr Maliki and his coalition partners from the Shia majority, who have been the main beneficiaries of the new political order in Iraq.
Continued or increased violence could also easily increase the risk of wider regional troubles, with Iraq's neighbours backing one group against its rivals to ensure an outcome favourable to their national interests.
Iraq and Washington had agreed that all American troops will have withdrawn by the end of 2011.
Should continued violence force a change to those plans, this would be a serious blow to US President Barack Obama, who has made orderly military disengagement from Iraq one of his top foreign policy priorities.
Wednesday, August 19, 2009
Iraqi Dinar Value - Shattered in Baghdad blasts: Iraqi faith in security forces
Shattered in Baghdad blasts: Iraqi faith in security forces
From street sweepers to Foreign Ministry guards, Iraqis say their countrymen are falling short of their duty to protect them.
By Jane Arraf Correspondent of The Christian Science Monitor
Baghdad - At the site of the deadliest Baghdad bombing in 18 months, Iraqi faith that their security forces could protect them lay shattered in the wreckage.
Outside the Foreign Ministry in central Baghdad, residents and security people gathered around tangled heaps of the frames of burned cars, some of them still smoldering into the evening.
"Iraqi security forces aren't strong enough – you see the police talking on their cellphones and listening to music," said Harath, a Foreign Ministry guard sitting under the dangling wires of a broken light fixture.
The ministry had been evacuated just after a truck packed with an estimated ton of explosives detonated, killing 59 people and wounding 150, but eight hours later Fatima Abdullah Sharif was still searching for her daughter Zainab, a ministry employee.
"Have you heard anything about her?" she asked each passerby in an anguished voice. "I've been looking for her since this morning."
Zainab, one of Fatima's three children, had returned temporarily to Baghdad two months ago from her job at the Iraqi consulate in Mexico. "I worked so hard to raise them," sobbed Fatima, explaining that her husband died 12 years ago.
Many of the dead and wounded were ministry officials. Foreign Minister Hoshyar Zubari, who was not in Baghdad when the bombs hit, flew back from the Kurdish capital of Arbil and went to hospitals to visit the wounded after landing.
'I would prefer the US troops stay'
The ministry, surrounded by high concrete walls on a busy street, was near a checkpoint that had been dismantled earlier this year. As attacks in Baghdad have decreased, Iraqi authorities eager to show improvement in security and make the city livable again have started removing concrete walls and security checkpoints.
"We all know our security isn't perfect. We saw a big truck in the security camera," said Hawree Talabani, an employee in the IT department at the ministry. Blood seeped through a bandage wrapped around his head. "How can you drive a truck with a ton of explosives up here?"
Across the street, near the blackened branches of trees that caught fire in the explosions, policeman Hameed Eid explained why as he examined the tangled metal that was the remains of his car.
"They removed the checkpoint and we have no scanning devices for explosives," he said. "I would prefer to keep the concrete walls. I would prefer that the American troops stay but the Iraqis and the Iraqi political parties can't agree among themselves about it."
Hallmarks of Al Qaeda in Iraq
Thousands of US combat troops who had patrolled Baghdad with their Iraqi counterparts pulled back to the main US base outside the city in line with a June 30 deadline under the US-Iraqi joint security agreement. The move, a prelude to the complete withdrawal of US forces by the end of 2011, has raised concerns that Al Qaeda in Iraq and other insurgent groups are creeping back into the city.
The US military says it was asked for and provided aerial surveillance after the attacks for intelligence gathering, medical evacuation, and forensic help to try to piece together who was responsible.
The coordinated attack, on the anniversary of the bombing of the UN headquarters in Baghdad in 2003, with its size and sophistication, had the hallmarks of Al Qaeda in Iraq.
"These attacks represent a reaction to the opening of streets and bridges and the lifting of barriers inside the residential areas," Prime Minister Nouri al-Maliki said in a statement. He blamed Al Qaeda in Iraq and former Baathists, as did many of the Iraqis in the streets.
"Only the Baathists would do this – they like destruction," said Saad Kamal Rahim al-Saadi, a street sweeper in an orange vest who was making a futile attempt to clear shattered glass.
"Not everything that happens is because of the Baathists," disagreed Abu Isa, a driver. "The Baathists themselves are afraid right now. If I was a security person I would protect the people – they're not doing their jobs."
'No one from the government has come here'
Another Iraqi in the gathering crowd, a shopkeeper, said he believed the United States and Israel were behind the bombings, because they wanted an excuse for American troops to stay.
Sardar Khorsheed, one of the Kurdish security people at the nearby parliament building, sat on the edge of the giant crater where the truck bomb had exploded.
"When the Americans were here there were no big explosions," he said, but added that that didn't mean he wanted the American troops to return.
Some of the anger of Iraqis was directed at the Iraqi government.
"No one from the government has come down here," said Henna al-Tamimmi, who lives in one of the blocks of apartments across the street. She said her windows were blown out, the doors hanging off her hinges, and the furniture in pieces. "It looks like the explosion happened in our house – where are we going to sleep tonight? All Iraqi officials do is go on television and say they have everything under control."
From street sweepers to Foreign Ministry guards, Iraqis say their countrymen are falling short of their duty to protect them.
By Jane Arraf Correspondent of The Christian Science Monitor
Baghdad - At the site of the deadliest Baghdad bombing in 18 months, Iraqi faith that their security forces could protect them lay shattered in the wreckage.
Outside the Foreign Ministry in central Baghdad, residents and security people gathered around tangled heaps of the frames of burned cars, some of them still smoldering into the evening.
"Iraqi security forces aren't strong enough – you see the police talking on their cellphones and listening to music," said Harath, a Foreign Ministry guard sitting under the dangling wires of a broken light fixture.
The ministry had been evacuated just after a truck packed with an estimated ton of explosives detonated, killing 59 people and wounding 150, but eight hours later Fatima Abdullah Sharif was still searching for her daughter Zainab, a ministry employee.
"Have you heard anything about her?" she asked each passerby in an anguished voice. "I've been looking for her since this morning."
Zainab, one of Fatima's three children, had returned temporarily to Baghdad two months ago from her job at the Iraqi consulate in Mexico. "I worked so hard to raise them," sobbed Fatima, explaining that her husband died 12 years ago.
Many of the dead and wounded were ministry officials. Foreign Minister Hoshyar Zubari, who was not in Baghdad when the bombs hit, flew back from the Kurdish capital of Arbil and went to hospitals to visit the wounded after landing.
'I would prefer the US troops stay'
The ministry, surrounded by high concrete walls on a busy street, was near a checkpoint that had been dismantled earlier this year. As attacks in Baghdad have decreased, Iraqi authorities eager to show improvement in security and make the city livable again have started removing concrete walls and security checkpoints.
"We all know our security isn't perfect. We saw a big truck in the security camera," said Hawree Talabani, an employee in the IT department at the ministry. Blood seeped through a bandage wrapped around his head. "How can you drive a truck with a ton of explosives up here?"
Across the street, near the blackened branches of trees that caught fire in the explosions, policeman Hameed Eid explained why as he examined the tangled metal that was the remains of his car.
"They removed the checkpoint and we have no scanning devices for explosives," he said. "I would prefer to keep the concrete walls. I would prefer that the American troops stay but the Iraqis and the Iraqi political parties can't agree among themselves about it."
Hallmarks of Al Qaeda in Iraq
Thousands of US combat troops who had patrolled Baghdad with their Iraqi counterparts pulled back to the main US base outside the city in line with a June 30 deadline under the US-Iraqi joint security agreement. The move, a prelude to the complete withdrawal of US forces by the end of 2011, has raised concerns that Al Qaeda in Iraq and other insurgent groups are creeping back into the city.
The US military says it was asked for and provided aerial surveillance after the attacks for intelligence gathering, medical evacuation, and forensic help to try to piece together who was responsible.
The coordinated attack, on the anniversary of the bombing of the UN headquarters in Baghdad in 2003, with its size and sophistication, had the hallmarks of Al Qaeda in Iraq.
"These attacks represent a reaction to the opening of streets and bridges and the lifting of barriers inside the residential areas," Prime Minister Nouri al-Maliki said in a statement. He blamed Al Qaeda in Iraq and former Baathists, as did many of the Iraqis in the streets.
"Only the Baathists would do this – they like destruction," said Saad Kamal Rahim al-Saadi, a street sweeper in an orange vest who was making a futile attempt to clear shattered glass.
"Not everything that happens is because of the Baathists," disagreed Abu Isa, a driver. "The Baathists themselves are afraid right now. If I was a security person I would protect the people – they're not doing their jobs."
'No one from the government has come here'
Another Iraqi in the gathering crowd, a shopkeeper, said he believed the United States and Israel were behind the bombings, because they wanted an excuse for American troops to stay.
Sardar Khorsheed, one of the Kurdish security people at the nearby parliament building, sat on the edge of the giant crater where the truck bomb had exploded.
"When the Americans were here there were no big explosions," he said, but added that that didn't mean he wanted the American troops to return.
Some of the anger of Iraqis was directed at the Iraqi government.
"No one from the government has come down here," said Henna al-Tamimmi, who lives in one of the blocks of apartments across the street. She said her windows were blown out, the doors hanging off her hinges, and the furniture in pieces. "It looks like the explosion happened in our house – where are we going to sleep tonight? All Iraqi officials do is go on television and say they have everything under control."
Saturday, August 1, 2009
Iraqi Dinar Value - Supplementary Budget Shows Deficit of Iraqi Dinar 3.9 Trillion
I guess we aren't the only ones that believe in huge deficits, is it possible the greatest US export is unsound financial planning?
http://www.edinarfinancial.net/news/?quer=&nm=&ny=&nn=601
Supplementary budget shows deficit of Iraqi dinar 3.9 trillion
July 29, 2009
“The supplementary budget, submitted to our committee, has an Iraqi dinar 5.3 trillion deficit. The committee believes that there is no need to present a supplementary budget with such a huge deficit,” Alaa al-Sadoon said.
On July 19, the Iraqi cabinet approved a draft supplementary budget for the current year, prepared by the Finance Ministry. The budget was planned to be devoted to provinces suffering from lack of allocations.(Source)Aswat Iraq
http://www.edinarfinancial.net/news/?quer=&nm=&ny=&nn=601
Supplementary budget shows deficit of Iraqi dinar 3.9 trillion
July 29, 2009
“The supplementary budget, submitted to our committee, has an Iraqi dinar 5.3 trillion deficit. The committee believes that there is no need to present a supplementary budget with such a huge deficit,” Alaa al-Sadoon said.
On July 19, the Iraqi cabinet approved a draft supplementary budget for the current year, prepared by the Finance Ministry. The budget was planned to be devoted to provinces suffering from lack of allocations.(Source)Aswat Iraq
Tuesday, April 7, 2009
Iraqi Dinar Value- We Are Outta Here
Is It Time For This To Go Balistic The Other Way?Hefty support for Obama's Iraq withdrawal: poll
WASHINGTON (AFP) — More than two-thirds of Americans support President Barack Obama's plans to withdraw most US troops from Iraq, a new poll said Tuesday as Obama paid a surprise visit to Baghdad.
A total of 69 percent backed the withdrawal plan while 30 percent were opposed, the poll by CNN and Opinion Research Corp. said.
In February Obama announced he was pulling most combat troops out of Iraq by August 2010, although a force of up to 50,000 will remain until the end of the following year. The current deployment is more than 140,000.
A military accord signed last November between Baghdad and Washington requires all US forces to leave the country by the end of 2011.
The poll was released as Obama arrived for his first visit to Iraq since taking office in January, amid a new upturn in deadly attacks blamed by the Iraqi government and US military on the Al-Qaeda terror network.
The president told CBS television late last month that he would not speed up troop withdrawals from Iraq, arguing the war-torn country was "moving in the right direction" but still needed US help.
The CNN poll of 1,023 respondents was conducted by telephone from Friday to Sunday, and has an error margin of three percentage points.
Monday, April 6, 2009
Iraqi Dinar Value-The Lowest Deaths In The Entire Conflict, Does This Mean The Iraqi Dinar Will Explode In Value?
Does This Mean The Iraqi Dinar Will Explode In Value?
Iraq: U.S. Troop Deaths At Record Low In March
April 1, 2009
Only four U.S. troops were killed by hostile action in Iraq during March - the lowest monthly figure since the invasion in 2003, and down from 11 deaths reported for February, Reuters reported April 1, citing official statistics. The number of Iraqi civilians killed in violence was at 180 for March, a decline from 211 reported in February, according to Iraq's Ministry of Health. The all-time low was recorded in January, with 138 deaths.
Thursday, March 5, 2009
Iraqi Dinar
Latest Headlines Regarding Iraqi Dinar - Oil price slump starves Iraq of funds
- Inflation slips to 9.2 percent
- 7.5 pct GDP growth in 2009 optimistic but attainable
- Iraq undecided on new IMF standby arrangement
By Missy Ryan and Wisam Mohammed
BAGHDAD, March 5 (Reuters) - The slump in oil prices will force Iraqi officials to make more sober budget decisions at a time the country is seeking to rebuild from years of war and fuel broad-based growth, the central bank governor said.
Iraq relies on oil for more than 95 percent of revenue and Prime Minister Nuri al-Maliki's government is already grappling with tough decisions as it looks for ways to reconcile today's oil price outlook with spending priorities crafted last year.
"There will be a difficult transitional period, but it should give us an idea of how to take a more realistic attitude toward allocations and demands from the various sectors," Sinan al-Shibibi said in an interview late on Wednesday.
"Of course, this occurs at the wrong moment because of the fact that Iraq actually needs to embark on huge projects and it will affect that. There will have to be reshuffling of the budget, and between investment and consumption."
An original plan to spend $80 billion in 2009 has already been shaved to $62 billion, but further cuts are likely needed.
Lawmakers have been sparring for weeks on ways to cut costs without jeopardizing plans to undertake urgently needed reconstruction projects and provide basic services -- all while avoiding stoking instability by cutting public sector pay.
INFLATION DROPS
As Iraq emerges from the worst of the sectarian and insurgent violence unleashed by the 2003 U.S.-led invasion to oust Saddam Hussein, it is now focusing on creating jobs and plans to rebuild a shattered economy.
Shibibi said core inflation, which shot as high as 35 percent in the chaos after 2003, had dropped to 9.2 percent now.
The bank has pursued a strong dinar policy, Shibibi said, in order to curb core inflation, which excludes fuel and transport. Iraq holds currency auctions through which it sets the exchange rate.
Iraq is also striving to reverse the dollarization of its economy since 2003. Today, the dinar is "very much in demand, and we think this is good for the economy and good for combating inflation," he said.
As inflation subsides, the bank has cut its policy interest rate to 11 percent from 14 percent in January, Shibibi said.
But with retail lending still scarce, the bank's policy rate is seen mainly as a signal to banks in setting their own rates rather than the transactional tool it is elsewhere.
"We want now to encourage investment and lending in general but (the policy rate) will depend - I don't want to give an idea of the direction - on the results of inflation every month."
Shibibi said lending in Iraq's banking sector, still largely isolated from the rest of the world, was picking up, mostly in financing trade and some personal loans excluding mortgages.
Increasing the availability of credit will be one key element for creating growth outside the oil sector, by far the biggest in dollar terms but which generates relatively few jobs.
Shibibi said the International Monetary Fund's December forecast for 2009 gross domestic product growth of around 7.5 percent was "probably optimistic" due to the global oil trend.
"On the other hand, it will be attainable because there will be a big endeavour ... to increase (oil) production," he said.
Iraq has been courting major investment in its oil fields, which contain the world's third largest proven reserves, but short-term help is urgently needed to update aging facilities and boost output that remains below pre-invasion levels.
NO IMF DECISION YET Shibibi said growth outside the oil sector, which the IMF expects will be 6 percent in 2009, "needs a lot of work".
Iraq has been spared much of the impact of the financial crisis due to its relative financial isolation, but it may be hurt by a slowdown in oil demand. Shibibi said that the growth of money supply in Iraq had probably slowed more recently.
Iraq has yet to decide whether it will seek another stand-by arrangement from the IMF, Shibibi said, but said such a decision could come when Iraqi officials meet shortly with the IMF.
Iraq is also due to begin repaying its remaining stock of Paris Club debt in 2011. Shibibi said he didn't expect that new obligation would pose a major problem.
"I really don't think it is very dangerous ... Of course the amount at the beginning will be relatively big, but we will have to manage that unless we restructure again," Shibibi said.
"The Paris Club debt was cancelled 80 percent, so we're talking about 20 percent. A few countries cancelled 100 percent, but the remaining debt from other creditors, we have to deal with that and probably there will be another restructuring." (Editing by Toby Chopra)
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